According to NeighborWorks America, a national, nonpartisan nonprofit, more than one-fifth (21%) of Americans plan to use their expected tax refund to pay down or pay off debt, while under ten percent will use the money to pay everyday expenses. According to NeighborWorks, “The millions of adults who will use their tax refund in this way underscores the fragility of finances for millions of Americans, particularly for those who have the lowest incomes.”

For a clear, easy to read chart showing the various uses to which refunds are put, click on the link below. I guarantee you that you will be surprised by what you see.

If you do not file your federal income tax on time and are due a refund, there is no penalty assessed by the IRS. However, if you do owe taxes and file late, it is to your advantage to file as promptly as possible. The late filing penalty is 5% of the additional taxes owed amount for every month (or fraction thereof) your return is late, up to a maximum of 25%. If you file more than 60 days after the due date, the minimum penalty is $135 or 100% of your unpaid tax, whichever is smaller.

One of the hottest debates in the personal finance field is whether folks with several installment loans should pay off the smallest debts first or those with the highest interest rates. A recent study addresses that issue and concludes that because of psychological reasons, rather than financial reasons, the smallest debts should be paid off first.

According to the report, researchers who study consumer behavior found that “small victories” consumers feel after quickly wiping out small debts provide encouragement to pay others. That’s counter to the usual advice to pay debts from highest interest rate to lowest, with the goal of paying less interest.

For more of the detail of the study, follow the link below and come to your own conclusion:

Most of us have just completed our 2015 tax returns and many are expecting a refund—be it large or small. Unfortunately, there are many unscrupulous people waiting to relieve you of your refund. Should you find that you are the victim of tax return fraud, following are steps you should take as soon as you discover that there is a problem:

1. Fill out IRS Form 14039.

Form 14039 is the affidavit that notifies the IRS that you’re a victim of IRS tax return fraud. Send it via certified mail with a return receipt request, so you’ll know that the IRS received it. Remember to keep a copy of the form for yourself.

2. Remember to check on your state return.

Your state return also may have been compromised as well. Therefore, you should contact your state taxing authority and follow its procedures for reporting the theft.

3. Protect your credit.

If you are a victim of identity theft, you’re entitled to a free 90-day fraud alert on your credit report. This alert requires businesses to verify your identity before opening new accounts. After that, you can ask the credit bureaus for a seven-year extension.

A credit freeze is another option which may be better because a credit freeze prevents potential creditors from accessing your credit report to check your credit, thereby preventing accounts from being opened accounts in your name. Just remember that if you freeze your credit, there is a rather extensive set of steps you might have to go through each time you want to use it.

4. Secure your cellphone.

Fraud alerts are linked to your phone number. That’s the reason identity thieves often try to gain access to a victim’s cellphone account to try to redirect fraud-alert calls. To counter this action, ensure that your email address is attached to your account.

5. Paper file your tax return.

Because the thieves have already filed a return in your name, you won’t be able to file electronically, so you must then submit a paper return. You must also include a photo ID and the Form 14039 described above.

6. Be prepared to reconfirm your identity.

The IRS may ask you for additional information to confirm your identity. This may include items such as a copy of your driver’s license; copies of a select number of utility bills; or a copy of the previous year’s tax return. Most criminals would not have such items readily available. Remember, the IRS will not call you either to get or give information; Also, it does not request personal information via email, text or any social media platform.

7. Be patient.

Once you have filed your report, it likely will be months before the matter is fully investigated and resolved. According to its own website, “The IRS typically resolves identity theft cases within about 120 days.” If you have not heard from them by that time, I would recommend that you call and politely ask for a status update.

Notice: U.S. Passport changes are coming in 2016. If you are a U.S. citizen and anticipate either renewing an old passport or applying for a new one, there are several changes that will be implemented by year end. Not only will passports be thinner, but also they will be more durable and more secure. So you don’t get caught off guard when you find you do need a passport, my advice to you is that you take a few minutes now to review the changes and check your passport. A minute taken now can save you time, hassles, and money once the 2016 changes go into effect.

The changes are too numerous to describe here, but I suggest that you google “2016 Passport Changes” to see whether any of the changes apply to you.

With April’s designation as National Financial Literacy Month, the article referenced below give adults tips on how to develop financially literate children and teens—both male and female. It discusses things like saving; having open discussions with them about financial matters; debt management; credit; banking and more.

You can feel sure that if you take the time to go through each of the nine steps outlined, your kids will be a huge step ahead of their counterparts when it comes to understanding and managing their money. This certainly will make your job as a parent/guardian/teacher a lot easier.

Share information – within reason. If you struggle with debt or have other financial issues, you do not need to scare children with details. But it is important that they understand that you must work to earn the money that you spend, and that going into debt has consequences. Talk with younger children about why you are choosing to buy one item over another, and how to make reliable purchases. With teens, discuss credit card use, interest rates, grace periods, late fees and the consequences of making only minimum payments.

Know your cards – and explain them to your children. These days, just 9 percent of purchases are made with cash. Consumers use debit cards 43 percent of the time and credit cards 35 percent of the time. But to a child or teenager, a card might look like just plastic. Explain the difference between debit cards and credit cards. Point out smart choices. Explaining that paying for groceries with a debit card means that the money comes right out of the bank account, for instance, so there is no chance of paying interest next month for food you eat this week.

Model responsible choices. Every time children see you handling or worrying about money, you are teaching them. If you overspend and then worry about credit card bills, you are showing that debt is a way of life. Buying children everything they want teaches them that money flows like magic. Instead, talk through your choices: “I really want these new speakers, but they cost $100, and I only have $70 in my wallet right now. Next week, I’ll have the full $100, so I will come back. That’s great too, because I can be sure I still want to buy them.”

Teach kids to save. Teaching a child how to build rainy-day savings is one of the most valuable gifts you can give. First, make sure you have a savings plan in place. Then model how you save. Talk with kids about how a portion of your salary goes directly into a savings account. Explain how you paid for a major purchase, such as a car or home repair, with money you had saved, and how you will rebuild your savings after the expenditure. Encourage children and teens to save a portion of their income. If possible, consider encouraging them by matching savings contributions.

Do not train children to go into debt. Allowing children to borrow from you consistently so that they can spend more than they have teaches them that “income” depends more upon what they want than what they can afford. Help them learn to delay gratification to achieve bigger rewards. You could explain, for instance, that if they spend $10 buying snacks at the movie, it might be fun. But if they eat popcorn at home later, they are one step closer to saving for the game or the jeans they have been wanting.

Let them earn their keep. Teach your offspring that work is the way to earn money. Many experts believe that paying for chores or grades is ineffective, because tasks like making the bed and doing homework are part of daily responsibilities, not optional extras. But it can be smart to give children an allowance, so they can practice making financial decisions. It also can work to let children earn extra for taking on bigger responsibilities.

Talk about finances and futures. A 2014 study found that parents are good at talking with kids about saving, but not as open about their income, investments and debt. Especially during the teen years, think about discussing these. Teens need to know that their efforts and their future careers will affect their income and their financial positions. Begin looking at the big picture of income, college and career planning once kids get into middle school.

Teach them about credit. For some teens, you might view a credit card as a necessity – for instance, if they will be traveling, or if they need to purchase gas away from home. Before considering a credit card for a teen, teach them the basics of compound interest, credit scores and how their credit-card use can affect their financial futures. If you need a review, too, check a personal finance publication or online financial resource.

Include both sons and daughters. The study mentioned above, as well as another study in 2015, found that parents incorrectly believe boys are financially smarter than girls. As a result, parents talk more about money with their sons. Yet unmarried people now outnumber married people in the United States, which means plenty of women are managing their own finances. And one-third of working women earn more than their husbands. Be sure you provide financial education for your children of any gender.

Many people worry about having “the money talk” with their children because they worry they will do it wrong, somehow. But like any other difficult subject, they are going to learn it someone. Learning from parents is one of the best gifts children will receive from their families.

Below is the proclamation by President Obama declaring April 2016 National Financial Capability Month.

Your Money Wiz

– – – – – – –BY THE PRESIDENT OF THE UNITED STATES OF AMERICA A PROCLAMATION:

When every American has the tools they need to get ahead and contribute to our country’s success, we are all better off. Since the recession, we have built our economy to be better and stronger than before, but we still have work to do to make hardworking families’ paychecks go further. Ensuring people have the resources to make informed decisions about their finances is critical in this effort, and during National Financial Capability Month, we recommit to equipping individuals with the knowledge and protections necessary to secure a stable financial future for themselves and their families.

At some of life’s most important junctures — including buying a home, pursuing an education, or saving for retirement — having access to reliable information about our country’s financial system can help people avoid being ripped off or sucked into cycles of debt they cannot get out of. That is why my Administration is promoting tools to protect and empower individuals, working to increase borrowers’ understanding of what they are getting into before they take out a loan, and educating more people on how to think about their money. I encourage all Americans to call 1-800-FED-INFO or visit http://www.MyMoney.gov andhttp://www.ConsumerFinance.gov for access to free and reliable financial information.

No young person should be saddled with excessive debt. In addition to striving to inform young people of the dangers of taking out too much consumer debt, my Administration launched the “Know Before You Owe” campaign, which is helping America’s college students know their full range of options for financing a higher education. I also created the President’s Advisory Council on Financial Capability for Young Americans to help educate our rising generation on important money management skills so they can live with security and make positive contributions to our economy. So more of our people can retire with dignity and stability, we established a new type of savings bond, myRA, to help more Americans easily save for retirement. And I signed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which, among other consumer protections, established the Consumer Financial Protection Bureau, the first agency solely dedicated to protecting consumers from unfair practices and predatory products in financial services.

As our economy continues to grow, we must preserve the basic notion in our country that hard work will be rewarded and that no matter who you are or where you come from, you can make it if you try. This month, let us encourage informed financial decisions and promote resources that help the American people make them, and let us reaffirm our belief in the idea that opportunity should be within reach for all who are willing to work for it.

NOW, THEREFORE, I, BARACK OBAMA, President of the United States of America, by virtue of the authority vested in me by the Constitution and the laws of the United States, do hereby proclaim April 2016 as National Financial Capability Month. I call upon all Americans to observe this month with programs and activities to improve their understanding of financial principles and practices.

IN WITNESS WHEREOF, I have hereunto set my hand this thirty-first day of March, in the year of our Lord two thousand sixteen, and of the Independence of the United States of America the two hundred and fortieth.
BARACK OBAMA

As I find personal finance tips and articles I think many of you may find helpful, I try to bring them to your attention. Following is part of an interesting article I came across today in USA Today that provides useful information to any of you who haven’t yet filed your 2015 taxes.

LAST-MINUTE FILING TIPS:

IRS Tax Tip 2015-58, April 10, 2015

If you haven’t done your taxes yet, don’t despair. There’s no time like the present to prepare and file your 2014 tax return. Visit IRS.gov for tax tools and help that can make filing your tax return a bit less taxing.

1. Don’t delay. Don’t wait until the last minute to do your taxes. The old saying is true: haste makes waste. If you rush to beat the deadline, you may miss out on tax savings or make a mistake. An error will likely delay your refund and often causes the IRS to send you a letter.

2. Use IRS Free File. If you made $60,000 or less, you can use free, brand-name tax software to do your taxes and e-file for free. If you made more, you can use Free File Fillable Forms. With that program you e-file for free with the electronic version of IRS paper forms. Get started now atIRS.gov/freefile. Free File can help also with the new health care law tax provisions.

3. Try IRS e-file. No matter who does your taxes, you should file them using IRS e-file. It’s the safe, easy and accurate way to file your tax return. You’re 20 times less likely to make a mistake when you e-file compared to filing a paper return. That’s because the tax software catches and corrects common paper filing errors. It also will alert you to tax credits and deductions you may otherwise miss.

5. File on time. If you owe taxes but can’t pay by April 15, you should still file on time and pay as much as you can. This will minimize penalties and interest charges. If you can’t pay all the tax you owe, you may apply for an installment agreement. The easy way to apply is to use the Online Payment Agreement tool on IRS.gov. You can also apply by mail using IRS Form 9465, Installment Agreement Request.

6. File an extension. If you’re not ready to file by April 15, you can get an automatic six-month extension. You can e-file your extension request for free using IRS Free File. You may also file using Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return. Make sure to e-file or mail the form and pay an estimate of any tax due by April 15. You can get the form at IRS.gov/forms anytime.

Since I know many of you are still working on your 2015 taxes, I thought I’d share with you an interesting article in USA Today about the reporting requirements surrounding interest received from the various financial institutions with which you do business. The main point of the article is that ALL interest must be reported if it’s over 50 cents. (The IRS allows rounding, so anything below 50 cents can be omitted and you will still be within the rules.) Continue reading →

Came across a very interesting Forbes Magazine article regarding excess credit fees many of us may be paying. The author talks about a number of fees like credit/debit card fees, bank account fees, travel expenses, etc. Take a look. There’s likely a way you can cut back on this expense and save yourself some money. http://www.forbes.com/…/l…/2016/03/22/spend-less-fees/print/

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Davis Financial Services brings to life the long-time dream of its founder, Patricia A. Davis. The dream: Improve the lives and finances of everyday people by expanding their knowledge and understanding of important financial matters. Davis Financial Services offers public and private sector organizations and individuals a full curriculum of innovative, well-researched education programs designed to explain, clarify, and demystify financial subjects. Since inception, DFS has helped thousands of individuals to secure a better financial future.